TARP watchdog sinks teeth into fraud

When police caught up to Glen Alan Ward in April 2012, in a small city southwest of Toronto, he had been on the run for 12 years.

Ward fled the United States for Canada in 2000, after duping struggling homeowners into paying him fees to fraudulently delay their foreclosures. He continued the scam over the next 12 years, collecting more than $1.2 million in fees and delaying 824 foreclosure sales for distressed homeowners in 26 states.

Text Size

-

+

reset

How did they finally catch up to him? Ward eventually messed with the wrong banks.

Or, more specifically, banks with taxpayer cash in their vaults, courtesy of the 2008 bank bailout law.

Ward’s case illustrates the aggressive role played by the watchdog Congress created to keep an eye on the funds given to banks — big and small — through the Troubled Asset Relief Program to guard against fraud.

The scams are complex and the co-conspirators many, but five years after the bailout, the watchdog is getting better at unraveling and uncovering them, said Christy Romero, who heads the special inspector general for TARP. At the same time, many of the cases the IG has spent years putting together are coming to fruition.

In short, as programs to help banks survive the financial crisis begin to wind down, SIGTARP’s fraud hunting is going strong.

“Those cases are incredibly, incredibly important to us because committing fraud against a TARP bank is committing fraud against the taxpayers who funded the TARP bank,” Romero told POLITICO. “So we’re not going to let anybody get away with that.”

In Ward’s case, SIGTARP worked with the Justice Department’s U.S. Trustee Office to track Ward — who used five aliases — to his hideout in Canada, after busting another man whom he had trained to operate a similar scam. Ward was sentenced last month to 11 years for his fraud.

Congress established SIGTARP to keep track of the $457 billion earmarked for ailing financial institutions, auto manufacturers and struggling homeowners through the 2008 bank bailout law.

The office has mostly made headlines by criticizing the Treasury Department for how it has administered TARP, including to what degrees it has set up programs to help struggling homeowners.

This has led to tensions between the office and Treasury, many of which were detailed in a recent book by Romero’s predecessor, Neil Barofsky, where officials have argued the watchdog has been overly critical at times and that its reports can have a nitpicky quality.

But as the fervor over the bailout fades, the inspector general’s office has increasingly devoted its efforts to its primary mission: tracking down fraud.

The unit has seized more than $4.3 billion related to TARP fraud, along with luxury goods and property, like 19th-century European oil paintings, a bronze candelabra with green malachite columns, waterfront vacation homes and a slew of luxury and classic cars, including a 1958 Mercedes-Benz Cabriolet and 1963 Shelby Cobra. The items are sold, and proceeds are returned to the Treasury Department.

The office has more than 150 open investigations and has brought criminal charges against 151 individuals, including 93 senior officers. It has secured criminal convictions for 111 defendants, 52 of whom face prison time, with an average sentence of 68 months — nearly double the average sentence involving white-collar crime.

“That’s indicative of the complexity of these schemes, the amount of money involved and the very nature of what’s involved, the fact that these are financial crisis-related cases,” Romero said.

The office has law enforcement power — it can issue subpoenas, seize assets and make arrests — and its investigations unit is manned by 86 agents in Washington, New York, Atlanta, San Francisco and Los Angeles. Most of them came from other federal agencies such as the FBI, Secret Service and IRS criminal investigations unit and have many years of experience. (To protect their identities and the integrity of investigations, SIGTARP would not make any agents available for this story.)

Romero is quick to note that much of their work depends on close collaboration with other state and federal officials — and in the case of Ward, authorities in Canada, as well.